Jamaica Transformer Company Ltd and Lewstan Corporation Ltd v Jamaica Redevelopment Foundation Inc.

• Jurisdiction: Jamaica
• Judge: Mangatal J:
• Judgment Date: 17 May 2007
• Judgment citation (vLex): [2007] 5 JJC 1701
• Date: 17 May 2007
• Court: Supreme Court (Jamaica)

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM No. 2006 HCV 03485

BETWEEN

JAMAICA TRANSFORMER CO. LIMITED.

1 ^ST CLAIMANT

AND

LEWSTAN CORPORATION LIMITED.

2 ^ND CLAIMANT

AND

JAMAICAN REDEVELOPMENT FOUNDATION INC.

DEFENDANT

Mr. Crafton S. Miller and Miss Suzette Wolfe instructed by Crafton S. Miller and Co. for the Claimants.

Mrs. Michelle Champagnie and Miss Ky-Ann Lee instructed by Myers Fletcher and Gordon for the Defendant.

INJUNCTIONS - Property - Application to restrain defendant from exercising powers of sale

REAL PROPERTY - Debt owed - Injunction to restrain defendant from entry to property to remove goods

Mangatal J

1 In March I heard an application by the 1 ^st and 2 ^nd Claimants "Jamaica Transformer" and "Lewstan" respectively for interlocutory injunctions restraining the Defendant "Jamaican Redevelopment" from selling, transferring or otherwise disposing of three properties belonging to Lewstan. Those properties are situated in Caledonia, Manchester. The application is concerned with restraining Jamaican Redevelopment from exercising powers of sale which it has by virtue of mortgages held over these three of Lewstan's properties. It also concerns an application to restrain Jamaican Redevelopment its servants and/or agents from entering another property belonging to Lewstan and from removing transformers therefrom which Lewstan claims belong to it.

2 The matter has been vigorously contested and argued comprehensively and I wish at the outset to express my appreciation of the clear and concise manner in which the Attorneys-at-Law for the parties made their submissions.

3 Jamaica Transformer is a limited liability company registered under the laws of Jamaica with registered offices at 68 Caledonia Road, Mandeville, Manchester.

4 Lewstan is a limited liability company registered under the laws of Jamaica with registered offices in Mandeville, Manchester, and is the registered proprietor of the following properties:

• a) All that parcel of land situate at Caledonia, Mandeville, Manchester, containing by survey Three Roods Twenty-five perches and eight-tenths of a perch, being the land comprised in Certificate of Title registered at Volume 1373 Folio 104 of the Register Book of Titles.

• b) All that parcel of land known as Number Sixty-Eight Caledonia Road situate at Mandeville, Manchester, being the land comprised in Certificate of Title registered at Volume 1369 Folio 174 of the Register Book of Titles.

• c) All that parcel of land part of Caledonia known as Number Seventy Caledonia Road, situate at Mandeville, Manchester, being the land comprised in Certificate of Title registered at Volume 1123 Folio 809 of the Register Book of Titles.

5 Jamaica Transformer and Lewstan carry on the business of repairing, designing, redesigning and manufacturing power and distribution transformers. This business is carried on at 68–72 Caledonia Road, Mandeville, Manchester.

6 In addition Lewstan also says that it carries on business at 73 Caledonia Road, Mandeville, Manchester on the land comprised in Certificate of Title registered at Volume 132 Folio 24 of the Register Book of Titles of which Lewstan is the registered proprietor.

6 a. Jamaica Transformer and Lewstan have common directors and Leslie Lewis Senior has a controlling shareholder interest in both companies.

7 Jamaica Transformer obtained loan facilities with the then Workers Savings and Loan Bank "Workers" and in or about May 1996 this facility amounted to a total debt exposure of $7,710,737.00.

8 In or about 1997 Jamaica Transformer made further arrangements with Workers and then obtained loan facilities which Workers indicated totalled $24,600,625.00 at simple interest of 45% per annum.

9 Lewstan guaranteed the repayment of these loans and facilities made available to Jamaica Transformer and to that end provided Workers with security for repayment in the form of mortgages over the properties referred to at paragraph 4 above by way of Instrument of Mortgage No. 1005477.

10 Workers eventually merged with Citizens Bank Limited, Island Victoria Bank Limited and Eagle Commercial Bank Limited to form Union Bank. Subsequently Union Bank's debt portfolio, including the indebtedness of the Claimants, was transferred to Finsac, then Refin Trust, and finally to Jamaican \ Redevelopment.

11 Debts originally owed to Workers were transferred to Jamaican Redevelopment by way of Deed of Assignment dated January 30, 2002. The mortgages in favour of Workers which were endorsed on Lewstan's titles referred to at paragraph 4 above were transferred to Jamaican Redevelopment.

12 By correspondence dated October 22, 2005, Jamaican Redevelopment issued formal Letters of demand to Jamaica Transformer and Lewstan. Further Letters of demand dated January 19, 2006 were issued. There was originally some dispute as to whether Jamaica Transformer or Lewstan actually got these letters which Jamaican Redevelopment say that they sent by registered mail. However that really is not an issue in the case before me since it is not disputed that the Receiver appointed by the Defendant delivered copies of the letters dated January 19, 2006 to Leslie Lewis Senior which Mr. Lewis says he received sometime in August/September 2006. There is therefore no need to examine the provisions in the mortgage dealing with deemed service as the Claimants received actual notice of the demand and lack of notice has neither been pleaded nor argued as an issue.

13 On the 27 ^th June 2006 Jamaican Redevelopment appointed Kenneth Tomlinson of Business Recovery Services Limited, as Receiver and Manager of Jamaica Transformer pursuant to powers contained in a Debenture dated 8 ^th September 1997. Mr. Tomlinson was also appointed Receiver over Lewstan's properties referred to at paragraph 4 above pursuant to Mortgage No. 1005477. Jamaica Transformer was notified of the appointment of the Receiver.

14 Jamaican Redevelopment states that Jamaica Transformer & Lewstan remained in default in repaying the growing debt, and so it exercised the powers of sale granted to it by virtue of the Mortgage Instrument. The properties referred to at paragraph 4 above were put up for auction, and the auction which was fixed for the 3 ^rd October, 2006 was advertised in the Gleaner newspaper.

15 The Claimants aver that in purported exercise of his Receivership the Receiver illegally and wrongfully trespassed on Lewstan's property registered at Volume 132 Folio 24 of the Register Book of Titles and removed therefrom transformers belonging to Lewstan when neither that property nor Lewstan's assets were mortgaged or charged to Jamaican Redevelopment. The Claimants also say that since the appointment of the Receiver Lewstan's properties which were used as security for the loans have been vandalized and materials or items thereon stolen, destroyed and/or sold far below the market price.

16 By notice of application dated 2 ^nd October 2006, Jamaica Transformer and Lewstan applied to the court for interim injunctions in the following terms:-

• (1) An injunction to restrain Jamaican Redevelopment whether by its servants and or agents from selling, transferring or otherwise disposing of Lewstan's properties to wit:-

  • (a) ALL THAT PARCEL OF LAND situate at Caledonia in the Parish of Manchester containing by survey Three Roods Twenty-five Perches and Eight Tenths of a Perch of the shape and dimensions and butting as appears by the plan thereof hereunto annexed and being the land comprised in the Certificate of Title registered at Volume 1373 Folio 104 of the Register Book of Titles.

  • (b) ALL THAT PARCEL OF LAND known as Number Sixty-eight Caledonia Road situate at Mandeville in the Parish of Manchester containing by survey Three Roods Thirty-one Perches and Three Tenths of a Perch of the shape and dimensions and butting as appears by the plan thereof hereunto annexed and being the land registered at Volume 1369 Folio 174 of the Register Book of Titles.

  • (c) ALL THAT PARCEL OF LAND part of Caledonia known as Number Seventy Caledonia Road Mandeville in the Parish of Manchester registered at Volume 1123 Folio 809 of the Register Book of Titles.

• (2) An injunction to restrain Jamaican Redevelopment whether by its servants and or agents from entering onto Lewstan's property registered to wit ALL THAT PARCEL OF LAND part of Caledonia in the Parish of Manchester containing by estimation two Acres be the same more or less and butting westerly on land in the possession of Alexander Hall and on the other side on public roads and being the whole of the land registered at Volume 132 Folio 24 of the Register Book of Titles and from removing therefrom transformers owned by Lewstan which are not the subject of any mortgage.

17 An interim injunction which was sought ex parte was first granted on the 2 ^nd October 2006 and this injunction has subsequently been extended on dates when the matter has been before the court and the hearing adjourned.

18 There have been a number of Affidavits filed herein on both sides. Mr. Crafton Miller on behalf of the Claimants has argued that the injunctions ought to be granted until trial. He submitted that the principles which ought to guide the court in determining whether or not to grant injunctive relief are those laid down by Lord Diplock in the well-known decision of the House of Lords in American Cyanamid Co. Ltd. v. Ethicon [1975] 1 All E.R. 504 at 510 (c) – 511(f).

19 I summarize the guidelines set out in American Cyanamid as follows: -

• (a) Firstly the court must consider whether there is a serious issue to be tried. All that needs to be shown is that the Claim is not frivolous or vexatious. Unless the material available on the hearing of the application for interlocutory injunction fails to disclose that the Claimant has any real prospect of succeeding in his claim for a...